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http://www.minyanville.com/articles/index.php?a=11687
http://www.minyanville.com/articles/index.php?a=11687
3. Dudley Named Markets Chief by Fed
The Federal Reserve Bank of New York is expected to announce today that William Dudley, currently an advisory director of Goldman Sachs, will become executive vice president for markets on Jan. 1, the Wall Street Journal reported.
Good lord, what a load of gibberish all that stuff above was. Open market account? Chief manager? Market turmoil? What?
- Mr. Dudley, 53, had until last year spent 10 years as chief U.S. economist for Goldman, the newspaper reported.
- Dudley's new position at the New York Fed will make him manager of the central bank's Open Market Account.
- The Open Market Account and operations are the means by which the Federal Reserve implements monetary policy.
- They implement policy chiefly by buying and selling government securities or other instruments.
- In addition to advising the Federal Open Market Committee (FOMC) on market developments and likely responses by the markets to specific Fed monetary policy decisions, the market's chief acts as a point person when the Fed needs to intervene during periods of market turmoil.
- According to the Journal, in his role at Goldman Sachs, Mr. Dudley frequently advised Goldman's traders on how to react to economic news.
Good lord, what a load of gibberish all that stuff above was. Open market account? Chief manager? Market turmoil? What?
- Look, think of the Fed as like The Sopranos. Ben Bernanke is basically Tony Soprano.
- Now, the Federal Reserve has two main offices, one at Satriale's Pork Store and the other at the Bada Bing Club. The FOMC usually meets at the Bada Bing while the Federal Reserve as a whole hangs out at Satriale's.
- So, say Phil Leotardo, who is acting head of the Lupertazzi family while Johnny "Sack" Sacrimoni does time, decides to whack one of Tony's crew members, Vito Spatafore.
- This is like China selling dollars to diversify its forex reserves.
- Because Vito was a good earner for Tony, there has to be some kind of retaliation. Otherwise, competitors (like the European Central Bank, for example) will think they can do whatever the hell they want.
- So Tony calls a meeting at the Bada Bing and is advised by his consigliere Silvio "Sil" Dante (the equivalent of Federal Reserve Vice Chairman Donald Kohn) to blow up one of the Lupertazzi bookmaking operations in Brooklyn (read: stoke inflation fears and mechanically pick up the slack in the market by buying or selling bonds to maintain the appearance of control over monetary policy and short-term interest rates).
- Here is where Dudley comes in. Now Tony (Bernanke) can't physically go out and blow up the Lupertazzi bookmaking joint. He's the boss, after all. So instead Tony gets Paulie Walnuts, the equivalent of Dudley, one of his soldiers, to arrange to have the joint blown up.
- This is a very loose analogy, of course.
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